Japan's 10-year bond yield retreats from near 16-year high as investors unwind positions

TOKYO, March 7 (Reuters) - Japan's 10-year government bond (JGB) yield retreated from a 16-year high on Friday, while yields on super-long dated bonds tracked soaring German bund yields higher on Berlin's plans for a massive spending package.

The 10-year JGB yield JP10YTN=JBTC fell 0.5 basis point (bp) to 1.51%, after hitting 1.53%, its highest level since June 2009 earlier in the session.

The 20-year JGB yield JP20YTN=JBTC rose 3.5 bps to 2.235% and the 30-year JGB yield JP30YTN=JBTC rose to 2.55%, their highest levels since mid-2008.

"As expectations for the Bank of Japan's faster interest hike grew, investors were expecting the gap between yields of the mid-to-long-term bonds and the super-long-term bonds would narrow, which made the yield curve flat," said Naoya Hasegawa, senior bond strategist at Okasan Securities.

"Today, it seems that they are unwinding these positions on the back of a rise in yields of European bonds."

JGB yields across the curve rose in the previous session, with the yield on 10-year JGB posting its biggest daily move since Japan's market meltdown in August last year.

The decline in the 10-year bond yield does not mean that the market will keep buying the bonds, Hasegawa said.

"The market is cautious the yields may rise further because there is a continued bet on the BOJ's further interest rate hikes."

Yields on shorter-dated bonds also fell from their multi-year highs on Friday, with the two-year JGB yield JP2YTN=JBTC slipping 0.5 bp to 0.845%.

The five-year yield JP5YTN=JBTC fell 0.5 bp to 1.12%.